Tag: for-profit

You gotta love Elizabeth Warren! Her January NYT article reviews some of the biggest breaches of law that our government actively fails to enforce, even when millions of dollars have been knowingly tossed away for the sake of profit. She gives examples where companies out right commit fraud and are only given fees that the companies have no issue with paying–often times, the profits they reaped from breaking the law these companies far more money than the fine they had to pay.

While her examples are aimed a financial institutions, she makes sure to point out how mismanagement, distribution of inaccurate information and the loss of millions of dollars were occurring in both the pharmaceutical and educational industries.

She gave used EMC as an example:

When the Education Management Corporation, the nation’s second-largest for-profit college, signed up tens of thousands of students by lying about its programs, it saddled them with fraudulent degrees and huge debts. Those debts wrecked lives. Under the law, the government can bar such institutions from receiving more federal student loans. But EDMC just paid a fine and kept right on raking in federal loan money.

As I always say, I’m deeply troubled why anyone would think for-profit schools can effectively work in favor of their students when they make financial promises to shareholders.

This NYT article discusses why both for-profit & non-profit schools jack their tuition up and graduate students who wont be able to find a job.

The following quote from the article summarizes what allows schools to do this:

In 2006, Congress extended the federal Direct PLUS Loan program to allow a graduate or professional student to borrow the full amount of tuition, no matter how high, and living expenses. The idea was to give more people access to higher education and thus, in theory, higher lifetime earnings. But broader access doesn’t mean much if degrees lead not to well-paying jobs but to heavy debt burdens. That is all too often the result with PLUS loans.

What’s happening here seems to be, in part, true for colleges. Who’s responsibility is it to present students with a current, true, blunt and comprehensive view of what loans, schools, career and desire really mean?

If schools are fudging with the numbers, they clearly know that they’re doing something wrong. Schools and students shouldn’t receive federal loans until the school can actually produce a 67% field-related employment rate for their students.

EDMC, a for-profit higher-education institution, settled on a weak contract that benefits them more than the students they defrauded. Senator Elizabeth Warren, among others, rightly disagreed and seek more accountability.